It always amazes me how long it takes dying businesses to finally give up the ghost. And how long it takes shareholders to admit that they are going to lose every last dollar if they don't bail out before the stock loses all of its value. We are seeing that in the retail space today as one dying brand after another bites the dust, and we are going to see it in the consumer space as well. Nostalgia is bittersweet, but investing in nostalgia is just bitter.

A sure sign that a company is in serious trouble is when it announces a restructuring plan. (See my article on TGT a few weeks ago.) An even more ominous sign is when it puffs up its chest and claims that its restructuring plan is actually something more grand rather than merely another tired attempt to fix a broken business model.

The company I'm writing about today chose the latter route by calling its desperate attempt to save itself a "Transformation Plan." But in this stock's case, it did more than restructure itself – it sold off its North American business (keeping a minority 19.9% position) and decided to tie its fate to the emerging markets, which have been giving it all kinds of currency and tax fits for years, and to one of the most tough-minded hedge funds in the world.

This company is no longer the master of its own fate. It now works for Cerberus Capital Management, LLC (Cerberus) and is effectively a private equity portfolio company masquerading as a public company.

As you're about to see, that's a huge red disaster flag (and a good short opportunity)…

AVP(NYSE:AVP) is one of those companies that's been living off its reputation forever. The iconic Avon Lady reminds us of the type of beautiful woman that Don Draper would have seduced in Mad Men. But that era is gone and the idea of women selling cosmetics door-to-door is a fairy tale from a vanished past. Not only can women easily buy any cosmetic in the world over the Internet or from companies like Birchbox.com, but they are no longer sitting at home waiting for the doorbell to ring.

All Avon has to sell at this point is nostalgia. The rest of its products can be purchased more easily elsewhere.

Avon management knows this, and they're willing to try almost anything to drum up a few extra bucks – as evidenced by their most recent "deal with the devil." I mean that almost literally.

In March 2016, Avon sold its North American businesses into a separate company called New Avon LLC that is 80.1% owned by Cerberus, an investment firm that specializes in investing in distressed companies, and 19.9% owned by Avon. To give you an idea of Cerberus' temper (if its name, which is based on the mythological three-headed dog that guarded the gates of Hades, doesn't…

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